Book review: The Contradictions of Real Socialism

Sat 22nd Dec 2012

Michael Lebowitz addresses the problem of why twentieth century attempts at creating socialist societies have gone wrong. His book refers mainly to the USSR with references to some of the East European socialist states, particularly Hungary. These states he defines as having consolidated ‘Real Socialism’ in the period following 1950. According to Lebowitz, they failed as Marxist projects because they did not achieve ‘full human development’. The Soviet model lacked democratic and cooperative production, a socialist civil society and it was characterised by ‘actually existing bureaucratic rule’. (p.12).

In elaborating his case, the author offers an analysis of Soviet type societies as well as an account of how and why they failed. In much of his argument, the author relies on the work of the Hungarian economist, Janos Kornai, particularly ‘The Socialist System’ and ‘The Economics of Shortage’. Kornai denigrates planning and the social and economic security it gave to employees. His argument, adopted by Lebowitz, is that security of employment under socialism (people rarely lost their jobs) gives rise to irresponsibility in anyone susceptible to it. As managers are concerned to secure output defined in the plan they hoard labour. Output becomes erratic and supply of commodities and services falls short of demand. ‘Shortages’ characterise the socialist states. The efficiency of the economy is seriously undermined. Labour productivity falls. Innovation is not encouraged. Economic growth declines. The socialist system of planning is not viable.

The reliance on Kornai who extols the capitalist free market system and who has made explicit his view that there is ‘no alternative to capitalism’ is somewhat odd for a book seeking to formulate a socialist alternative. However, the arguments are crucial to allow Lebowitz to conclude that the Soviet system of planning had failed.

But Kornai’s logic is flawed. Under capitalism there is also an economics of shortage – in this case just the shortage of money. If ‘shortage’ is the criterion of success and failure, why has capitalism not failed through a lack of consumer purchasing power? Capitalism has an oversupply of goods and an undersupply of money for people to buy them. Hence it suffers from systemic problems of unemployment of labour and capital.

The question is whether planning could satisfy wants in a more just and efficient way than the market. The leaders of the traditional Soviet system thought that it could. As we consider the effects of the world economic recession, a planned system appears to have considerable advantages. Lebowitz concedes that workers could not be removed from their jobs - workers had ‘job rights’ as well as a right to employment. They also had comprehensive social services which were mostly free at the point of delivery and included health provision, education, pensions. Utilities (power and housing) were also provided at cost. A high proportion of women were in paid employment and this was enabled by comprehensive and highly subsidised child care. In the socialist states there had been a steady rise in living standards over the years of socialism, even during the Brezhnev period. Income differentials were remarkably low - even if one includes administrative benefits (holidays and goods in kind) differentials for the elites were qualitatively narrower than under capitalism. All this of course does not mean that income levels were higher than in the advanced capitalist states.

These advances, however, hide the power relations of ‘Real Socialism’. For Lebowitz, it is a form of ‘Vanguard Socialism’ and ‘the workers’ are exploited – they do not see work as fulfilling but are ‘alienated’. Work is a ‘disutility’. Workers lack ‘choice’. The economic and political system is ‘hierarchical’. The Vanguard Party ‘conducts’ society, as a musician conducts an orchestra.

Lebowitz considers the system to be one of class exploitation -despite the collective ownership of the means of production, managed by the state. Just who forms the ruling class is contentious. Most Western Marxist critics (writers like Tony Cliff, Chris Harman and Hillel Ticktin) consider the political and economic elites at the centre of the system to be the nucleus of the exploiting class.

Lebowitz, however, following the thinking of Charles Bettelheim argues that managers are the nucleus of the ruling class. Why? Because they have ‘control’ over the economic enterprise. This is somewhat surprising as it contradicts the idea of the Vanguard ‘conducting’ the economy. Lebowitz finds that the manager is able to circumvent the state plan. This is not very convincing as the superior administrative authorities controlled inputs (materials, credit, wages) to the enterprise which severely limited the power of managers. At the enterprise there were also Communist and people’s committees of control. This leads me to doubt this thesis and look for the guiding forces of change at the top of the political and economic system. The reform leadership ‘made’ the changes which allowed managers during the ‘reform’ process to seize state property for their own personal gain.

For Lebowitz, the Vanguard Party was subverted by capitalist elements. Was it then the Vanguard Party or the subvertors of Party rule who formed the ruling class? The reform movement within state socialism was led intellectually by people like Kornai, politically by reformers such as Gorbachev and was legitimated by Western economics. Could the system of economic planning have been ‘reformed’ in a different way? Following Kornai, Lebowitz thinks not.

The move to markets and capitalism has undoubtedly been a major step backwards. Social security and the public health system have been completely undermined. Full employment has been ended. Poverty has engulfed from a quarter to a third of the population in the Russian Federation. According to some health experts, the death rate during the transformation period in Russia is the highest ever recorded in an industrial society in peace time.

One alternative is the Chinese model. While this may be criticised from a socialist point of view, it is clear that Western economists (like Kornai) who believed that an economy could not deliver without a ‘free market’, privatised corporations and an autonomous banking system have been proved wrong. If China was able to ‘reform’ then surely the European socialist states also could have done so. Clearly, there are developments in the PRC which undermine the socialist vision. But these are reforms within state socialism and they may yet prove a model for socialism to move forward.

Lebowitz’s own proposals are disappointing. They are based on very general propositions completely divorced from current politics. Drawing on his earlier work, he advocates ‘A Charter for Human Development’ which includes: everyone having the ‘right to share in the social heritage of human beings’ in order to develop his or her potential to the full; the right for everyone to develop ‘their full potential and capacities through democracy, participation and the protagonism in the workplace and society’; the right for every one ‘to live in a society in which human beings and nature can be nurtured’ in communities based on cooperation and solidarity. Quite. But how does one move from where we are to implement this charter? Such thinking seems more related to the American dream than to current political reality.

For all its failings – and there are many- state socialism made significant advances in the direction of socialism and this experience has to be considered in a world perspective. They were relatively underdeveloped countries which had been engulfed in military and cold wars with the advanced industrial states of the West.

In the post-Stalin period, to use Lebowitz’s analogy: they had the wrong conductor leading the reforms and were playing the wrong neo-liberal set pieces. Poring over the works of Marx, Engels and Lenin in Talmudic fashion, and extolling very general principles can divert from real politics. We can of course learn from the classical Marxists, but they were writing in different times with different class formations. Policy in the post-socialist countries needs to save and retrieve the structures of public property, and socialist institutions which Kornai and Lebowitz are so ardent to destroy. The current crises in the world economy calls for a renewal of planning to replace the market. And here Lebowitz does have a point – such planning would be improved with greater participation.